New Trade Secret Indictments

Published 9:00 pm, Wednesday, April 10, 2002

The three Chinese nationals accused of stealing trade secrets from Lucent Technologies also victimized four other companies, according to a new indictment against them returned Thursday.

The three men, including two scientists who worked at Lucent's Murray Hill headquarters, now face 24 counts, including the original conspiracy charge, 14 counts of possessing trade secrets, and nine wire fraud counts.

They were first charged in May with plotting a joint venture with Datang Telecom Technology Co. Ltd., of Beijing.

The trio planned to become "the Cisco of China" by selling a clone of Lucent's PathStar data and voice transmission system to Internet providers in that nation, prosecutors claimed.

The new indictment said trade secrets were stolen not only from Lucent, but from companies that licensed portions of their software to Lucent or sold Lucent custom circuit boards for use in the PathStar server.

It named as victims Telenetworks, a unit of Next Level Communication, of Rohnert Park, Calif.; NetPlane Systems Inc. (formerly Harris & Jeffries Inc.), a subsidiary of Mindspeed Technologies, of Dedham, Mass.; Hughes Software Systems Ltd., a division of Hughes Network Systems Inc., of Gurgaon, India; and ZiaTech Corp., a subsidiary of Intel Corp., of San Luis Obispo, Calif.

Lucent fired the scientists after their arrests in May. Hai Lin, 30, of Scotch Plains, and Kai Xu, 33, of Somerset, had been on the Lucent staff developing PathStar for the telecommunications giant that was once part of AT&T Corp.

The third man, Yong-Qing Cheng, 37, of East Brunswick, was fired after his arrest from Village Networks, an optical networking vendor in Eatontown. He had worked as a consultant to Lucent on PathStar.

All have pleaded innocent and are free on bail.

Despite the additional charges, Assistant U.S. Attorney Scott S. Christie said he would not seek to delay the trial, scheduled for Sept. 24.

Cheng lawyer James A. Plaisted said the trial would likely come later. He said that defense lawyers expected the additional charges because the U.S. attorney's office had said it would make more specific accusations.

Xu lawyer Paul Fishman said his client continues to maintain his innocence.

The conspiracy charge carries up to 10 years in prison and a $250,000 fine, as does each of the trade secret possession counts. Each wire fraud count carries up to five years in prison and a $250,000 fine.

Datang has asserted it "always follows the laws and regulations about intellectual patents."

The three defendants, all legal U.S. residents, formed a company called ComTriad in January 2000. It formed a partnership controlled by Datang called DTNET about February 2001, which was funded with $1.2 million from Datang, the indictment said.

Prosecutors have said a substantial amount of the PathStar source code was sent to Datang.

Lucent said it discontinued the PathStar system in early 2001, shortly before discovering the theft and alerting authorities.